Why Individuals No Longer Rule on Sales Teams

Companies have long developed and managed their sales people differently from other employees, placing great emphasis on individual performance. To foster it, they often give sales its own learning and development team, recruiting specialists, compensation plan, and management and IT systems — but now they’re finding that those differences can hinder success as much as they support it.

Our colleagues in CEB’s HR practice have documented an extraordinary shift in the relationship between individual achievement and business unit profitability, both across the enterprise and within the sales function. From 2002 to 2012, the impact of individuals’ task performance on unit profitability companywide decreased, on average, from 78% to 51%. But the impact of employees’ “network performance” — that is, how much people give to and take from their coworkers — increased from 22% to 49%. Even in sales, network performance now accounts for about 44% of the impact.

On the most effective sales teams, particularly B2B, the individual no longer reigns supreme. Strong sellers don’t merely execute their day-to-day tasks well; they also engage with their colleagues to marshal resources, wrangle involvement, and coordinate people’s capabilities. As we discuss in our recent HBR article, “Dismantling the Sales Machine,” they rely on collective, even crowd-sourced, skills in ways that weren’t possible just a few short years ago.

Take, for example, a large media company we work with that invested in an internal social-networking platform for the commercial organization. The goal was to help sales reps exchange information about complex accounts. In the few years since the system has been in place, cross-sales have increased, cycle times have declined, and conversion rates have gone up. In one account alone, the improvements have driven $3.5 million in incremental revenue. Collaboration is better not only among the reps selling into different parts of that customer organization but also across the product and marketing teams charged with building and positioning broader solutions for the customer. Because sales reps are more directly networked with their colleagues through technology, they more easily aggregate skills, knowledge, and experience to uncover new opportunities and to debate tactics for generating business.

What’s most interesting about this story is that it’s the same sales force, by and large, with significantly better performance. Its structure, skills, metrics, and rewards have mostly remained the same. The key difference is the degree to which reps have taken advantage of new technology (largely built into their CRM system) to share and learn from one another. It’s a true network effect: the value of all of that shared information increases dramatically as more and more reps opt in to learn and, in turn, share with one another. Network behavior isn’t something you drive through compliance; you enable it through opportunity.

As organizations have begun to see the benefits of collaboration, they’ve also, unsurprisingly, started to change their sales incentives and reward systems. For instance, the sales function at Microchip, a global leader in semiconductors, has jettisoned the traditional highly leveraged variable comp plans based on individual performance. Instead, it’s taking an approach that looks strikingly similar to what you’d find elsewhere in the company: competitive base salaries coupled with a small variable component based on company and unit performance. The results? Record growth and profitability, increased rep engagement, and near-zero attrition. (For more about Microchip’s experience, see Daniel Pink’s HBR article “A Radical Prescription for Sales.”)

Such a dramatic change to the compensation system — what many consider the heart and soul of the successful sales machine — will seem far too disruptive and risky to a lot of companies. But at the very least, data and emerging experience both clearly indicate that every commercial leader should ask: To what degree are our current metrics and reward systems stifling the kind of collective, collaborative work necessary to sell effectively as an organization? How can we signal to our reps that network performance is not only desirable but expected? It’s something that star-performing reps figured out on their own long ago.

We’ve also seen an increase in importance of network performance at the manager level. Sales managers were once viewed as inspectors and enforcers of individual reps’ compliance to a prescribed set of activities. But research by our team in CEB’s Sales practice suggests that the best ones operate quite differently today: They facilitate idea exchange across their teams, use collective brainstorming to figure out how to unstick stuck deals, and borrow effective approaches to talent management and rep development from peers in other areas of the business.

A manufacturing company in the aerospace industry, for example, has organized managers from across the organization into standing cohorts that meet monthly to discuss common issues and identify creative solutions to problems their teams face. What might seem at first glance like a big drain on selling time is really a powerful way of tapping collective knowledge, experience, and expertise to address tough challenges individual managers might not have recognized, let alone solved, on their own. The cohorts serve as a strong reminder — and formal “permission” — to deliberately build connections with colleagues.

All this raises some important questions for commercial leaders: How would you score your sales reps on network performance? Are they tapping the knowledge and skills around them? Or are they still focused largely on succeeding as individuals — encouraged by their managers and organizational metrics and rewards to “avoid the distractions of the rest of the company”? Going forward, our research indicates, the answers to those questions will matter a great deal — and the old adage that sales reps are coin-operated individuals should no longer apply.